CITIZENS' ST. R. CO. V. CITY RY.CO.
647
which the constitutional inhibition is applicable, and, if applicable at all, it is only so because the excepted corporations are specific· .tlly named. The spirit of the provision would include such com· panies within. the exceptions. The legislature, by the limitation imposed upon the life of street-railway corporations, was probably of opinion that the letter of the constitution operated to require them to apply the limitation, inasmuch as a street railway is not a commercial railway. In any view of the question, that constitutional provision does not afford evidence of any such strong public policy as should operate to impose a limitation upon the power of the city to make a grant of a right of way extending for 16 years beyond the corporate life of the grantee. The evils to be apprehended from long grants of easements to such companies seem to us not to be such as to justify a constructive limitation on that account. The power to make an irrevocable contract giving an easement of some considerable duration is an inseparable incident in any scheme for furnishing such public facilities as a street railroad. The duration of such grants must be a question of discretion to be exercised by some public authority. That the exercise of that discretion should be left to the local government as a question of purely local interest seems most consistent with the proprieties of the case, and most in accord with the decentralizing policy so peculiar to the state of Michigan. Lord Eldon, in Wilkinson v. Adam, 1 Yes. & B. 466, quotes Lord Hardwicke as saying that "a necessary implication means, not natural necessity, but so strong a probability of an intention that one contrary to that which is imputed to the party using the language cannot be supposed." This definition meets our approval. Applying it to the considerations urged as sufficient to impose a limitation by implication, '"ye are unable to say that they afford "so strong a probability of an intention that one contrary to that which is imputed cannot be supposed." State v. Union Bank, 9 Yerg. 164. The decree must be reversed, and bill dismissed.
CITIZENS' ST. R. CO. v. CITY RY. CO. (Circuit Court, D. Indiana. November 10, 1894.) No. 8,866.
1.
STREET RAILROADS-RIGH.T TO USE STllEETS.
The general act (Act Ind. June 4, 18G1; Rev. St. Ind. 1881, § 4143 et seq.)l under which a street-railway company was organized, giving perpetual corporate existence, required that, before commencing the construction of any street railroad through the streets of any city, consent of the common council thereto should be obtained. A city ordinance gave such consent to the company to lay its tracks in certain streets. with the right to operate the railwa;)' for 30 J'eurs. During that period the term
1
Rev. St. 1894, § 54GO et seq.
648
FEDERAL REPORTER,vol.
64.
ordinancetq 37 l1el(l that. whether the city had not authority to impOse suell,limitation of time, the company had, 'dtirln* the enlarged term, an unexpired franchise, which the courts should protect"agltinst wrongful impairment, the remedy being the same whether. its rights in the streets were perpetual or limited, although. the two positlons'Yere inconsistent. ,
2. 8.
SAHEl-POWER OF CITY TO LIlrJ:T'.l'ERH OF USE OF STREETS.
The city had no power so to Uxplt the term. Per Woods, Circuit Judge, Baker, District Judge, dissenthil\'. OF RIGHT TO USE STREETS.
SAME-GRANT '1'0 RIVAL
Complainant, a street-railway ,company organized under an act (Act Ind. June 4, 1861; Rev. St. Ind. 1881. § 4143 et seq.)l which required it, before commencing the construction of its road through the streets of the city, to obtain the consent of the common council thereto, obtained such consent to lay its' tracks in certain streets, and to ()perate the railway for a certain term. Before the expiration of that term, an act constituting a new charter for the city (Act Ind. March 6, 1891) created a Qoard ,of public works, with power to authorize, by contract, street-car use any street in such city, and to prescribe the terms anq companies conditions of such use, such contracts to be approved by the common councll; and a contract wasi'lo made and approved, grantlng to defendant compapy the right to laY ,and maintain llnes of street railway on certain strtaats,·,wany of which were occupied by complainant's tracks. Held, that complainant :was not entitled to equitable rellef in respect to streets for its occupation of which it had not obtained the consent of the city, but that, as to streets occupied by it with such consent, the power to make ne", was not intended as a repeal of franchises of existing companies, and defendant should be enjoined from running its cars on complainant's tracks, or laying its rails so as to prevent or needlessly impede the running of complainant's cars.
This was a suit by the Citizens' Street-Railroad Company agaillst the City Railway Company to enjoin defendant from interfering with use of certain streets in the city of Indianapolis, or with the operation and maintenance of complainant's street-car lines in said city, and to establish complainant's rights in the premises. A motion to dismiss the bill was denied (56 Fed. 746), and the cause was heard on the pleadings and proofs. An ordinance Of the city of Ir:dianapolis passed Januar,y 18, 1864, contained the following provisions: "Section 1. Under and by virtue of an act of the general assembly of the state oJ: Indiana, entitled 'An act to provide for the incorporation of street railroad companies,' approved June 4th, 1861, and by virtue of the powers and authority of the common council otherwise by law vested, consent, permission and authority are hereby given, granted and duly vested unto the company, organized with R., B. Catherwood as president, a, body politic and corporate, by the name of the 'Citizens' Street-Railway Company of Indianapolis,' and their successors to lay a single or double track for passenger railway lines, with all the necessary -and convenient tracks for turnouts, side tracks and switches, in, upon and along the course of the streets and, alleys of the city of Indianapolis, hereinafter mentioned; and to keep, maintain, use and thereon railway cars and clKriages, in the manner, and for the time, and upon the conditions, hereinafter prescribed." "Sec. 15. The right to operate said railway shall extend to the full time of thirty years from the passage hereof; and the said city of Indianapolis shall not, during all the time to which the privileges hereby granted to said company shaUextend, grant to, or confer upon any person or corporation, any privilege which will impair or destroy the rights and privileges herein granted to the said company." 1
Rev. 8t;. 1894, § 5450 et seq.
CITIZENS ST. R.CO. fl. CITY RY. CO.
·
,
649
A further ordinance, passed April 7, 1880, provided that section 15, quoted above, be so amended as to read "thirty-seven" years instead of "thirty."
Benjamin Harrison and Miller, Winter & Elam, for complainant. A. C. Harris and Elliott & Elliott, for defendant. Before WOODS, Circuit Judge, and BAKER, District Judge. WOODS, Oircuit Judge. In respect to the question of jurisdiction, I am content with the decision heretofore made in this case, and reported in 56 Fed. 746. The corporate exiS'tence and the franchise of a street-railway company organized under the law of 1861 (Rev. St. Ind. 1881, § 4143 et seq.) 1 are derived directly from the state, but are subject to the condition that the consent of the common council shall be obtained to the location, survey, and construction of any street railroad through or across the public streets of any city before the construction of the same shall be commenced. The consent of the common council being required, it is in a sense true that the franchise is granted by the cHy, since the ultimate right is acquired or becomes effective only upon the giving of that consent. Andrews v. Pipe Works (7th Circuit) 10 C. C. A. 60, 61 Fed. 782. The power to construct tracks, switches, side tracks, or turnouts upon the streets, and, by implication, the right to run cars thereon, is conferred by the statute, or, in other words. is derived directly from the state, so that, strictly speaking, the city does not grant the franchise, but simply consents to its exercise. Detroit Citizens' St. Ry. Co. v. City of Detroit (C. C. A., 6th Circuit; decided Oct. 2, 1894) 64 Fed. 628. The right to give or to refuse consent implies the right to prescribe terms, and the terms need not, as I conceive, have direct relation to the specified subjects of "location, survey, and construction." They may embrace any reasonable requirement concerning the operation, as well as the construction, of the road, consistent with the statute. Carefully read, the first and fifteenth sections of the ordinance of January 18, 1864, show the unqualified or absolute consent of the common council given to the Citizens' Company "to lay" its tracks upon the streets named; but its consent to the use of cars on the tracks, or to the operation of the railway, was extended only to the term of 30 years. Is that restriction valid and binding? I am inclined to the view that it is not. Subject to the reserved power of the legislature to amend or repeal the act, perpetual corporate existence was given in explicit terms; and, in the absence of or implied limitation thereon, the necessary presumption is U;.at the franchise granted was intended to be of like duration, subject only to legislative revocation. It is not to be supposed that the legislature intended that there should be corporate existence without a franchise,-the only reason for such existence. It is not a question of perpetuity or of irrevocable right. If it were, different rules of construction would prevail. No presumption or inference could be allowed in of a perpetual right, and every reasonable intendment against it should be in"Rev.
st. 1894, f
5450 et seq.
·'.10
,nnmBA.L ,B.EPORlER,
vol. 64.···,
. lurks rather in the suppoSed power ,10, the common council.. ,. If. it had. authority to agree to a franchise'fOr 30 years, it might,withequal conclusiveness, have stipulated for one of 60 or 90 years, or any longer term, imposing upon It might be fOJ:generatiolll!!, the evils of a monopolistic perthe petuity. Thirty years are too many for a burdensome or unjust grant. As was said in Taylor v. Railway Co., 80 Miclr. 77, 45 N. W. 335, itls highly important that the legislature should retain the power to pass enactments for the control of these quasi publio corporations suitable to changed conditions of affairs. The village or small city cannot well provide regulations and ordinances applicable toa Jarge city. If agreemenaby common councils like the one in qnestion are authorized and binding, they must, when made, operate to suspend, pro tanto, the ,reserved power, of the legislature, by repealing the act, to terminate, the life of companies organized under it. They are inconsiatent with that ,power. On the contrary, it, when made, the agreements create no :rightbecauf!le made subject to the of ilia,legislature to revoke or modify them, then in legal contemplatipn they are .)Vithoutforce, and the power of city councils to them is a mere. pretel/.se. It isadelegated power to make an agreement which. bind, or ong4t not to bind, one party, thecQrporation, .because .it does not bind the other party, the state., In respect 1;0 auch pOw;ers the city is, the agent of the state;. ,and,belJides being anomalous, the proposition that, the city and .compapy will be bound by such contracts, ,and the state not bound, ia, IXlani{estly unillst and unfavorable·tothepublio interests. The ,statute is ageperal one, designed for uniform application to aU cities, but by the proposed construction uniformity is imposBible. An amendatory act could not affect all cities alike, and even in. the lilame city one company might be amenable to legislawould be exempt. It tive action from which another was ,well to provide, as was done. in the twelfth section of the act 'of 1861, that the exclusive powers of the cities over their streets sh9Uld remain unimpaired, except as necessarily affected by the, presence and operation of the railways authorized to be there. . Those- powers, it was held ip Eichels v. Railroad Co., 78 Ind. 261, did not include the power to grant the use of streets for street railways, .and they can be regarded, since the passage of the act of 1861, as having relatioll, not to the duration or termination of streetrailway., but rather to the manner of th:e,ir exercise. It it could he said that the city had authority. in the exercise of local selt.government, and by virtue of its general control over streets, to grant such franchises or to consent to their enjoyment, it might follow that a grant for a term of years would be valid, and W9uld, confer a vested property right which could not be the charter of the company to which it was granted.,. For instance, in New York the title to streets is vested in, the by. reason of that it was, held, in People ,v. 111 N. 'Y. 1, 18 N. E.692, that an easement granted by the O1ty of New York to a street-railway company for time con-
'ST. ,R··. CO. V. CITY i:}t.y;: 'CO.
651
stituted an indefeasible title in the land, which was not terminated by a repeal of the railway charter; bllt that could not be so in Indiana, where the. city has no title to the streets, and has not authority by virtue of its general powers, and outside of the street· railway acts, to grant the use of streets to street-railway companies. The general powers of control, as defined in the city charter, are the same from one day to another, and must be of constant application, whether the street railways are operated, and the franchises owned, by one company or another. The power to limit or to terminate such franchises is a part of the power to grant them, and upon reason, as well as authority, belongs to and remains in the sovereign or legislature, unless expressly or by clear inference bestowed elsewhere. The question of local self-government, manifestly, is not essentially involved. This view involves no fraud or hardship upon the people of the city, because it is always in the power of the legislature to authorize the imposition upon any company of additional restrictions; productive of revenue or other advantage to the public. The case of Sioux City St. Ry. Co. v. Sioux City, 138 U. S. 98, 11 Sup. Ct. 226, affords an illustration. In the nature of things, a street railway, once established where needed, will be of perpetual and increasing utility; and there seems to be no good reason why the franchise should cease while the utility lasts, though there may arise from time to time, and within periods much shorter than 30 years, necessity for changing the regulations, limitations, or conditions under which the franchise shall be employed. How far the power to make such changes shall be committed to local authorities is a matter of legislative discretion. Under the act of 1861 it is retained by the legislature. That body may amend; or, if it chooses, it may repeal, the statute, and so end all franchises and corporate life granted under it. According to some authorities, when a charter is repealed, provision must be made for a disposition of the corporate property without confiscation. In People v. Boston, etc., Ry. Co., 70 N. Y. 570, speakiug of the reserved power to alter, amend, and repeal laws authorizing corporations, the court said: "Under this reserved power the legislature may impose upon railroad corporations such additional restrictions and burdens as the public good requires. It may not confiscate property."
In Dash v. Van Kleeck, 7 Johns. 477, it was said: "It is repugnant to the first principles of justice and the equal and permanent security of rights to take, by law, the property of an individual without his consent, and give it to another."
use the streets of the city for that purpose, it can no longer so use the streets of the city, and DO longer exercise the franchise of running a railroad in the"
These expressions are reiterated and approved in People v. O'Brien, supra. See, also, Detroit v. Detroit & H. P. R. Co., 43 Mich. 140, 5 N. W. 275. But in Greenwood v. Freight Co., 105 U. S. 13, 19, Justice Miller, speaking for the court of the effect of the repeal of the charter of a corporation, said: "If the essence of the grant of the charter be to operate a railroad, and to
652 city"
'I'JIDEBAL' REPORTER,
vol. 64.
unincorporated private persons under thl! . fallaws of the state, is abrogated by the repl!'8l of the law Whichgrll.d.:" "esa special rights; Personal and real property BCl1uired by the C01'poralllOb. dUring its lawful existence, rights of contract, or chosesin action so which do not, in their nature, depend upon the general by the charter, w.-enot destroyed by such a repeal; and the courtS Uiay, If the legislature does not provide some special remedy. enforce such rights by the means within their power. The rights of the shareholdersot such a corporation to their interellt In its property are not annijlilated by such a repeal, and there must remalnln the courts the power tq protect those rights;"
ll!cJ1 could not be exercised by
. whatever
til! dependent' solely upon the grant of the
In that case, which concerned a street-railway franchise, the repealing act contained express provision for compensation to be made by the corporation, which was authorized to "enter upon and use any part of the tracks of any other street railroad," if the corporations interested could not agree upon "the compensation to be paid therefC)r;" so that the effect of a repeal without provision for such compensation was not before the court. Nevertheless, the principle declaredz I think, must be accepted as sound. The unrestricted right of repeal being reserved by the legislature, a repeal must "be regarded as valid and effective, whether or not a(:companied. With provisions fC)r the just disposition of the corporate property rights. If such provision is not made, "there must remain in the courts the power to protect those rights." But, without statutory provision to that effect, it is not perceived how a, court could compel a new company to take the tracks and equipment of the company whose franchise had been terminated. , If, therefore, the right of the Oitizens' Street-Railroad Company to occupy the streets of the city and run its cars upon existing lines has ceased, and under its contra,ct the City Railway Oompany has a right, not, of. course, to take possession of and use the tracks of the other company, but to put its own tracks in the place thereof, then we are confronted with a case either of indirect confiscation or of the destruction of property. The Citizens' Company must either reIllove its trMks, destroying their value, or it must accept such price as the City Company shall choose to give, and that is equivalent to confiscation. While an enactment to that effect would perhaps not be invalid, a construction which leads tQsuch results should not prevail when a reasonable interpretation is possible which involves no wrong or hardship either to the parties or t,o th,e, public. .T,he decision in\ Lewisville Natural Gas Co. v. State,135 Ind. 49, .34 N. E. 702, overruling of RushvIlle v. Natural .Gas 00., 132 Ind. 575, 28 :N'. E. 853, is, I think, not without significance in' respect to the interpretation n9W under consideration. of The atreet-railway companies by the statute to mort. gage and franchises indicates a purpose, that the a cOJ;l.tin'lling one. Of what value is a mortgilge on il franchise is.' to expire before or near the time when the mortgage will be enforceable? . The do,ctiiM'that parties' may, by, their conduct, put an intercontracts, 1$ notapplicable where adverse. pub-
CITIZENS'ST. R. CO. V. CITY RY. CO.
.653
"
lie interests are involved. The public is not bound by the acts of officers contrary to law, no matter how long maintained or acquiesced in. According to Reissner v. Oxley, 80 Ind. 580, to which reference has been made, parties may interpret their own contracts "so long as their interpretation does not result in a contract which, for some reason, is in itself unlawful." The act of 1891, which affects the city of Evansville alone, cannot be regarded as a legislative construction which should operate to give the act of 1861 a meaning which otherwise, in the judgment of the court, it did not have. That act prohibited the common conncil and other authorities of that city from extending any franchise or franchises affecting the streets of the city during the term for which they were originally granted by the city councils or other authorities. This presupposes, but does not sanction, the original grant for a term, nor does it confer a new power to make such term grants after the expiration of existing terms. It simply forbids what in this argument has been claimed to have been unlawful without such inhibition, namely, agreements for extending terms before they had expired. If such agreements had been theretofore unlawful, this statute should not be regarded as a legislative declaration of their legality. If the common council had authority to impose the original limitation of 30 years, then, in my opinion, the 7-years extension was valid. The ordinance of April 7, 1880, granting that extension, if otherwise valid, as I think it is, was not without consideration,-in the mutual obligations and interests of the parties; and granted, as it was, at the request of the company, its acceptance should be inferred. Upon either view of the council's power, therefore, the complain· ant has an unexpired franchise, for the protection of which it was entitled to invoke the action of the court; and that, too, I think, without being driven to an election between the two theories. The remedy sought is the same in character, whether obtainable upon one proposition or the other. The same public interest which forbids an interpretation of the contract by reference to the conduct of the parties, excluding the idea of estoppel, bears upon this question, and entitles the plaintiff, upon a proper presentation of the facts, to a decree according to the law as determined by the court; and, even if no public right were involved, it seems to me that an election would not be necessary. This brings us to a consideration of the rights of the defendant, the City Railway Company, and its alleged doings in derogation of the rights of the complainant. By the act of 'March 6, 1891, constituting a new charter for Indianapolis, there was created a board of public works, which was given power "to authorize and empower by contract telegraph, telephone, electric light, gas, water, steam, street car or railroad companies to use any street, alley or public place in such city, and to erect necessary structures therein, and to prescribe the terms and conditions of snch use, to fix by contract the prices to be charged to patrons: provided, that such contracts shall in all cases be submitted by said
654ij
FlllI:>ERAL:REPORTER,
vol. 64.; ,
common council Of such city, ,and approved, by .them; byiordinance before the 'Slime shall take effect." Acts. 16i)1, p. 169. this power the contract of April 24, 1893, as set out in the 6Mii18'tle'e Of approval, p{U'lsed the next day, which is an ex·" l1ibit"in':complainant's:biU, was executed. In terms.it gl;'anted to the defendant company "the right to lay a»d liue8f;()f 'street railwaY,to. be operated by electricity:or other immanyofwpich are by the tracks of tbe COmplainant, and required the linefnto' be' 1QCatE!d, it is claimed, as necessarily to with the plaititiff's line,. and obstruct the running of itlil proviso iBthefourthi s,ection of this contract is noteworthy. It reads: "Provided, 'however; that' iIi addition to the l,ines herein specified, the party second part be granted the right to. build the extending from WllllhingtO;ll!ltreet to .thecity: limits, both .north and south, on such streets as Ill.,ay by the board of public works, and approved by ordinance llassed by the common council of saidtiity." ." .
'the pOwer the';: l>0sseE\s; ttenables them tocdntract; and,wMnlt prescribes 'to them: R' riilRIe of contra:(lting; they' Inu$tobserve that mode.,' or the' instrumentlno'.morll breatl!l\I; p;, 1;h\'l' body had. never been incorpoU. 8.673,687, 1l- Sup. Ct, 441..
is. her¢' no. nor, as I think, fair implication, that the. ,sq pro;ppsed to be shall eomeunder, in: any ,governeq by, ;a:greementLmade in respect to other lines, and it does not appeal' that thebollrd .made any on;t:P.e subject. . It silIl;p1y desIgnated the streets il,le lines should be laid; and, for the appal'supplying, the common added to approval,passed }fay 13, 18M; aclatlBe to the effect should be to the terxps"provisions, ,tl;1econtr3:ct of ApI'll 24t)l, and the ordmance apprOVing that contract. ., . :. i of 1891, distinct powers are, con!erredupoy the board public 'W'9rks l;),ud. upon the common. councIl, respectlVely, and a Just regard :for the rights of the public' requires that the distinction The powerof the council in this matter was or refuse to approve the contract of the board. IUhe mere .Qes1gtiati(mby the board the additiona1line amounted to a of th.e.council to approve IUn ordM\lJ-pprove 1t. . '!'here 1S nothrng to show that the board mtended"anQ\t certa,illly not stipulate, either expressly or by necessaryimpp,catiQn, that,the lines so designated should be held and ,ungel,' ,the agreement. TheruleIs elementary "that, when' the mode of 'is especially and plainly prescribed an<lJiInited, thllt mode is .exclusive, and must be Jjill. lIun··GorP. §)49; tJity of Superior v. Norton (0. C. A., 7th Oircuit) M ':Fed. 357; Terre Haute Lake, 43 Ind.. 180; Francis y. 338 !n Head v.lnsurance Co., 2Cranch, 127, 169, Chief I ") i 1 "l . . ' ... ,.,' Marshall. said: _'.;'' , 4 . : . . . , ", ".Tb,eact Is.. to them an enabling act. . It gives them all
gr
of
J
'
, Wnile it if>. not a question which need be decided, I incline strong, 1y;w.,"flJe'opinioD, :upon the showing made,: that the ,QitY,:lWlwa,.
CI1ir1.:ENS' ST. K.· CO. V. CITY KY. CO.
655
. Company acquired no right to IllY its so-called "north and, south line." On the other hand, I am of the opinion that the complainant is not entitled to equitable relief in respect to its alleged right in the street so designated for the use of the defendant. Prior to that designation the complainant '.lad no lines upon those streets except a fragment on Pennsylvania street, which had been practicaJly, if not. legally, abandoned. By its own charter, as I construe it,-indeed, according to the plain letter,-it had no right to commence construction on a particular line without first having obtained the consent of the council to the "location, survey, and construction" proposed. The necessity for this consent was not affected, as I think, by anything contained in the ordinance of January 18, 1864, or in the supplemental ordinance of September 18, 1865. Besides, the entry of the complainant upon those streets was in violation of the ordinances of 1889 and ]893; and, if rights were thereby acquired, the complainant, in view of all the circumstances, should rely upon the courts of law for their defense, rather than look to equity for their establishment. The question whether the last-named ordinances are valid or not need not be considered, because by its own charter the complainant had no right to enter upon a street without the consent of the city, and the city was free, with or without reason, to give or withhold its consent. . In respect to other streets, the defendant has denied, by its answer, the assertioq of any claim to the present Occupancy of the part of any street upon which the tracksl of the complainant are laid, or that it desired to lay and operate electric lines on any street on which the complainant was, when its original bill was filed, operating any such electric line, "until after the expiration of its right thereto, if any it has." But from the terms of the contract and ordinance under which the rights of the defendant are asserted, from the notice which it served upon the complainant, from all the evidence upon the point, as well as from the arguments of counsel, it is evident that the defendant has been acting upon the assumption that the complainant's franchise and its right of possession have ended, and that under its contraet the defendant may take the possession which the complainant has held of the streets, if not, indeed, of tbe complainant's tracks. The power given by the act of 1891 to authorize and empower, by contract, companies of the various kinds named to use any street of the city, I think it clear, was not intended as a repeal of the franchises of existing companies; no more so of street-railway companies than of the various railroad companies whose roads occupy streets of the city. In so far, therefore, as the contract of April 24, 1893, by its terms confers, or attempts to confer, upon the defendant company the right· to lay its tracks in the place of the tracks of the Citizens' Company, or to appropriate those tracks, it is an invasion of the rights of the latter company, and should be enjoined. I am not to be understood as meaning that under the act of 1891 the city may not authorize the defendant or any other company to lay its tracks in the same streets on which the complainant's tracks
656
J'EDERAL REPORTER,
are laid,brit without additional legislation the cars of· one company may not, without consent, run uJion the rails of another c,ompany, hoI' may. the rails of one :be sO laid asto prevent or needlessly impede the of the other's cars. Deoree"may go accordingly. BAKER, District Judge. The franchise to be a corporation, with the right of perJietual succession, is derived by the complainant directlf from the state. Rev. St. Ind. 1881; § 4143 et seq.l The statute which imparts to it its corporate faculties confers upon it no rightt.o enter upon the streets of any city to construct and operate a street· railroad therein. It is expressly enacted that "all street railroad companies shall first obtain the consent of the common council to the location, survey and construction of any street rail· road through or across· the public streets of any city before the con· struction of the same shall be commenced." It is clear that the state has not undertaken directly. to confer upon the complainant the right to occuJiY and use the streets of the city for street-railroad purposes. Under the franchise and powers granted to it by the state, it is without authority to enter upon the streets of· the city to construct and operate a railroad. This· right is derivable from the consent of the city alone. Whether consent shall be granted or refused is exclusively within the control of the city. The right to occupy and use the streets of $\ city for railroad purposes is a franchise, and is wholly distinct from the franchise to be a cor· poration,'which is derived directly fromtne state. The latter franchise cannot be sold or eotrveyed unless express statutory authority is granted for that purpose. The franchise to use the streets for railroadpurposes-tbe right of way on which to build and operate a railroad for profit-is the subject of sale and conveyance. Railroad Co. v. Delamore, 114 U. So 501;5 Sup.Ct. 1009. T'he consent of the city imparted to the complainant a valuable franchise, which, without sucb consent, it would not have possessed. The state gave it tbe capacity to receive and enjoy this right or franchise, proV'ided the city saw fit to grant it.. The power to grant or refuse resided' in the city alone, and it carried with it the right to impose any terms not forbidden by law. If the city may refuse permission to use the streets atall, it must have the right to fix a limittothe term of their use. The greater poWer must include the He who can give the whole can give apart. He who can grant absolutely .can grant with a condition, reservation, or limitation. Whether street rail· roads shaJI be permitted to occupy the streets at all is left wholly with the city to determine upon its own judgment ofthe public convenience and welfare. The ordinance of 1864WllS an entirety, to be accepted or refused just as it was, and its acceptance was a con· dition precedent to the-occupancy of the l'ltreets.· . Nothing, there· fore, could make the ordinance a c<Jnsentbut the performance of the condition,-the acceptance of the ordinance as a whole. City of Allegheny v. Millvale, E. & S. St Ry. Co. (Pa. Snp.) 28 AU. 202. 1
Rev, St. 1894,§ 5450 et seq.
CITIZENS'ST. R. CO. V. CITY BY. CO.
657
The power to determine whether, and how long, street railroads may occupy the streets of a city, primarily resides in the state; but it is a power whose exercise has been wisely delegated to those who are directly interested in these questions. There is less danger of wrong and injustice in committing their determination to the city than there would be if the legislature should determine them di· rectly. The authorities of the city acting upon matters of local concern directly affecting themselves and their fellow citizens are not more likely to abuse their trusts in fixing the terms upon which a street railroad may occupy the streets of the city than the legis· lature would be. Local self·government and home rule in matters of municipal concern are of the essence of a republican form of government. Abuse of these delegated powers are securely guarded against by the superintending power of the state to correct them. It seems to me that the common council had ample power to grant to the complainant the right to use the streets for 30 years, subject to the paramount power of the state to alter the term. The fact that the complainant is invested with perpetual corporate existence does not, in my opinion, in any wise affect the power of the city to limit the use of the streets for railway purposes to a definite term of years. A corporation having a limited term of existence may acquire a title to property extending beyond the term of its corporate life. So, on the other hand, a corporation having perpetual existence may acquire property for corporate use for a term of years or in fee, to be determined by the terms of the grant under which its title is acquired. Nor does the power of the state to alter the term, in my judgment, affect the binding force of the contract between the city and the street-railroad company. The obligation of a contract or a law is not affected or impaired by the mere fact that it may be determined by the happening of some uncertain event in the future. Until the contingency arises, upon the happening of which their existence is to be determined, they are as binding and obligatory as though they were never to terminate. While the power of the state to alter or repeal remains unaffected, neither the city nor the rail· road company retains any rightful power to impair or defeat the binding force of the contract evidenced by the ordinance and its acceptance. Neither does this view result in the confiscation of corporate property, nor in injustice to either the city or the railroad company. Each enjoys exactly what was mutually and understandingly agreed upon. "Consensus facit jus." The denial of this right, on the contrary. would operate as a fraud upon the inhabitants of the city. It cannot be doubted that, if it had been understood at the time the ordinance was adopted that the complainant would thereby acquire the right to use the streets in perpetuity, it would have been required to yield greater returns to the city than were exacted, or it would have been denied the right to use them at all. If it be conceded that the necessity and utility of street railroads will increase with the growth of the city's population, still the supply of such need may be, as it has been, safely committed to those charged v.64F.no.6-42
.658
i"WithUbb.enonductof its mtinicipal,:afl1airs.: . Courts (I)ughtnot to:Mnstrue ',the:)statutes, is imperatively delID as to deny:to the city the power to determine, upon its view:of the needs of the:pwblic, when and'how long and by whom its streets shall be occupied by railroad tracks. Since the parties, by.mufual contract, have agreed on the measure of their respective right$;J no question can arise as to what ought to be done with the property of complainant when its contract rights expire by effi'ux of tinle, further than to protect the rights of each as fixed by the contract. NOl':does the fact that power was given to mortgage its property andframchises enlarge the right of the complainant to occupy the mortgagees a;nd bondholders were bound to inquire into the'title of the mol!tgagor, and they will be presumed to have made,their investmentob. 'the faith of the title as disclosed by the statute ofth,e state and the ordinances'of the city., No injustice is done them, for they get precisely what they contracted for. Hit ,shonld:beheld that the oomplainant acquired, under the ordinance, aright: to,the use in perpetuity, it would obtain a francbise,'Gf, inestimable value, contrary to the terms of the ordinance,,; and in violati(m Of, the rights and just expectations of the inhabitants of the city. ' the cormnoncouncilhad the power to agree with the complainant upon:thelength of the term, as a condition of its consent ti> ,its occupancy1 of the streets. Having the right to agree upon the term, it follows that it had the right to agree upon an enlargeme;nt, of: fth,eterm. In ,my judgment the enlarged term was validly granted ujx>n!a sufficient onsideration; and it has been accepted, so that: the rights of the' parties have become fixed beyond the power of changehytbem except by mutual consent. It follows that the complainant has an unexpired franchise, for the protection of which, against wrongful impairment it has the right to invoke the aid'of the courts; Nor do I think the complainant is remediless because it relies upon inconsistent positions for relief. The theory upon, which it seeks to maintain its right to relief is !the same whether its franchise to use the streets is perpetual or whether it expires in seven years. The relief obtainable in the present suit is the same in kind whether its rights in the streets 'Me limited or perpetual. A court will not refuse appropriate relief simply because the complainant has asked for greater relief than the facts of the ease will warrant. This' brings us to consider the rights of the Oity Railway Oompany and its a6tsitl derogati:onof the rights of the complainant. The act of March 6,1891, which constitutes the charter of the city of Indiana.polis, confersllpon the board of public works, which was thereby Cl'eated, the power lito authorize and empower by contract, telegraph, telephone, electric light, water, steam or street car or railroad 1companies to USe any street, alley or public place in any such citj('aJidto erect necessarystructllres therein, and to prescribe the terms and· conditions of such use, to fix by contract the prices to be: charged to patrons: prQvided, that such contract shall
CITIZENS' .S';!:". R.
v· .CITY
RY.:CO.
659
in all cases be submitted by said board to the council of such city, and approved by t.qem by or4inance before the same shall take effect." Acts 1891, p. 169, § 59; Under this power the contract of April 24, 1893, which is set out in the ordinance of approval passed the next day, and which is made a part of the bill of complaint, was executed. The contract granted to the defendant company the right to lay and maintain its lines of street railway to be operated by electricity or other improved power upon certain designatedstreets, many of which already occupied by the tracks of the complainant, and required the lines of the defendant company to be so located, it is alleged, as necessarily to interfere with the complainant's lines, and to obstruct the running of its cars. The contract further provided "that, in addition to the lines herein specified, the party of the second part will be granted the right to build a line extending from Washington street to the city limits, both north and south, on such streets as may be designated by the board and approved by ordinance passed by the common of council. of said city." In May, 1893, the board of public works designated certain streets extending fnom Washington street to the city limits, both north and south, as the streets on which the defendant company was to be granted the right to lay and maintain a street railway. The common council, by ordinance, enacted line "that the action of said board of public works in designating said line be and the same is hereby approved, and the said City Railway Company is hereby granted said line and the right to the same in accordance with the terms, provisions and conditions of the contract and ordinance approving the same." While there is no express stipulation that the additional line should be governed by the contract of April 24, 1893, which governs the other lines, still it seems to D;le, even without regard to the explicit language of the ordinance of May, 1893, that it must be held that such additional line falls within, and is to be governed by, that contract. Such, manifestly, was the purpose and understanding of the contracting parties, and I do not think their obvious intention can or ought to·· be defeated by the application of rigid and technical rules of construction. Here are two parties-the city by its board of public works and common council, and the defendant company-capable of contracting. It is too clear for debate that all these parties have agreed to the designation of the north and south line; that such designation has been approved by ordinance, and accepted by the defendant company. It is a fundamental rule in the construction of contracts that it is the duty of the court to ascertain and give effect to the intention of the parties, if lawful, whenever it can be done, "ut res magis valeat quam pereat." It seems to me, while the contract in regard to the north and south line is not technically formal, that, taIren as a whole, in connection with the ordinance of April 24, 1893, it contains enough to be binding on both contracting parties. But if I am in error as to the right of the defendant company to the north. and. south it "\Vould not aid the complainant. Prior to the of the allditional north and south streets for the
660
I'EbERALREPOBTER,
defendant, the complainant had lines upon .thOse streets except a fragment upon South PennsylvaJlJa street, WhICh had been if not legally, abandoned. I do not think the complainant,underihe ordinance of 1864 or 1865, had any vested right to the construction of a particular line without first obtain· of the common council to "the location, survey, and construction" of such proposed 'line. Therefore, the complainant, no consent from the city to occupy the streets in questi(jn, has ,no right to complain of 'their occupation by the defendant company. ' Other questions are presented in respect to the streets occupied by the complainant with the consent qf the city. The defendant, by itsltI1SWer, denies that it sets up any claim to the present occu· pancy of that part of any street lipon which the tracks of complainant's railway are laid, or that it intends or threatens to lay and operateUnes of electric railway on any street on which the complainll.l1t was operating an electric line, at the time suit was brought, "untl1 after the expiration of its right thereto, if any it has." But from the terms of the contract and ordinance under which the defendant company has acquired the rights which' it asserts, from the notice served upon the complainant, from the acts of defendant as disclosed in the record, as well as from the claims of its counsel, it seems apparent that the defendant company has been acting on the theory that the complainant's right to occupy the streets has ceased, and that under its contract it may rightfully take possession of them, 'and expel the complainant therefrom. In my opinion, the defendant company has no such rights. In so far as the defendant company claims the, right to interfere with the complainant's free and unobstructed use of its lines of electric railway on all the streets now rightfully occupied by it, its claim is wrongful and injurious. To the extent necessary to protect its quiet and undisturbed use of these lines against invasion by the defendant company, the complainant is entitled to the aid of the court. I entertain no doubt that the amended bill presents a federal question which gives the court jurisdiction. I have heretofore ex" pressed my views on this' question, and I do not think it needful to add anything to what I have already said on the same subject. Citi· R. Co. v. City Ry: Co., 56 Fed. 746.
HOOK v. AYERS et aL (Circuit Court of Allpeals, Seventh CircUit. December 14, 1894.) No. 155. CoBNRATIONS-OFFIOERS-,.14ILROAD BONDB-,PLEDGE.
A rallroadcoDlPany 247 bonds of another company pledged 125 of them to cross complainants, while,'the president of the company, with the knowledge of cross compla!nlUlts;' pledged the other 122 bonds to a sYJ:1.dicate two ot the cross compl&inaJ;lts, and others. ,!;Ie ovt the other ,members ot tlJ,esyndicate, and attempted absolutetttle to the bOnds by crediting a certain amount upon the debt of tlietrallroad Company. 'Held that, although the transac-